Today's Pick - Central Bank

We recommend a buy in Central Bank of India from a short-term perspective. The charts of Central Bank of India show that the stock was on a medium-term downtrend from its life-high of Rs 154.9 marked in early January 2008 till its mid March low of Rs 73.

More recently, the stock’s medium-term downtrend got arrested at around the support level of Rs 74.

The stock gained momentum by surging more then 11 per cent on March 25, initiating an up move. The positive divergence in the daily Relative Strength Index has supported the stock’s trend reversal. This indicator is rising towards the bullish zone in the neutral region. After penetrating the medium-term down trendline, the stock crossed over the 21-day moving average recently, signalling a buy.

Moreover, we also note a crossover in the moving average convergence divergence indicating a buy. Our short-term outlook for the stock is bullish. We expect the stock to rally further to our target level of Rs 102 in the short-term. Investors with a short-term perspective can buy the stock with a stop-loss at Rs 85.

Via BL